Sullivan, Long & Hagerty v. Southern Elec. Generating Co.

• Decision Date: 08 September 1995
• Citation: 667 So.2d 722
• Parties: SULLIVAN, LONG & HAGERTY v. SOUTHERN ELECTRIC GENERATING COMPANY. 1940692.
• Court: Alabama Supreme Court

Page 722

667 So.2d 722

SULLIVAN, LONG & HAGERTY v. SOUTHERN ELECTRIC GENERATING COMPANY.

1940692.

Supreme Court of Alabama.

Sept. 8, 1995.

Appeal from Shelby Circuit Court, No. CV-94-243; Michael Joiner, Judge.

Sydney F. Frazier, Jr., Birmingham, for Appellant.

M. Stanford Blanton and Lisa J. Sharp, Birmingham, for Appellee.

BUTTS, Justice.

Sullivan, Long & Hagerty ("Sullivan Long") brought a declaratory judgment action against Southern Electric Generating Company ("SEGCO"), seeking to determine SEGCO's obligations to contribute to a federal retirement fund for the benefit of Sullivan Long employees who had performed work under a 1974 contract between the parties. The trial court entered a summary judgment for SEGCO, holding that any obligation to contribute to the fund ended when the contract expired. Sullivan Long appeals.

I.

In 1974, Sullivan Long signed a five-year contract with SEGCO, agreeing to mine and deliver coal from SEGCO land. SEGCO agreed to pay Sullivan Long 50 cents per ton of coal produced, as well as other "Costs," as provided for in the contract. These "Costs" were set out in Paragraph 12(g)(4)(A) of the agreement:

"12. 'Costs.' ...

"....

"(g) Labor Costs. 'Costs' shall include all proper charges for labor incurred by the Mining Company in the prosecution of the mining operations upon the Lands hereunder, where properly stated, identified and invoiced to the full extent necessary to identify such labor as being required for such mining operations. Included in this category shall be:

"(1) Mine Labor: The cost of wages for the time worked by hourly, daily and monthly nonadministrative and nonexecutive employees of the Mining Company (such as those who at the time of this Agreement may be covered by a union contract) who are engaged directly in mining, preparation and delivery of coal from the Lands, excepting, however, any employee benefits or labor welfare charge.

"(2) Maintenance Labor: The cost of wages for full-time or part-time nonadministrative and nonexecutive employees of the Mining Company for time worked by them directly in keeping the plant and property of the Mining Company being used in operations hereunder in suitable working condition shall be chargeable as a 'Cost' hereunder.

"(3) Supervisory and Clerical Cost: The cost not included in (1) and (2) above of salaries and/or wages of other employees of the Mining Company engaged directly in mining operations under the Lands hereunder or whose primary duties relate to such operations including superintendents, foremen, engineers, prospectors, watchmen, accountants, clerks, timekeepers, materialmen, etc. If any employees of the Mining Company of the foregoing classifications are not engaged exclusively or full time in the mining operations upon the Lands hereunder or in work related thereto, then the cost of salaries or wages of such employees includable herein is the pro rata portion thereof representing the portion of their working time spent directly in such mining operations upon the Lands or related work.

"(With reference to (1), (2), and (3) above, the Mining Company shall, before beginning operations hereunder, submit for the written approval of SEGCO a schedule setting out job classifications, wage scales, ranges of salaries and compensation for such jobs, pertaining to employees for whose wage and salary cost payment is authorized under (1), (2), and (3) above. After the approval of such schedule, no additional classifications and no increase in such salaries, wages or compensation beyond the upper limits of such schedule for the applicable classification shall be permitted or made effective so as to be paid for by SEGCO hereunder without the prior written approval of SEGCO. Such schedules shall be jointly reviewed by the parties at regular intervals.

"(4) Employee Benefits Charges.

"(A) Welfare and Retirement Funds. The cost of required contributions to a welfare and retirement fund of any properly recognized bargaining unit of the Mining Company employees as now in effect or as same may be later amended during the term of this Agreement, and the cost of any contributions, payment or levy for employee benefits in the future applicable to employees such as those who are at the time of execution of [the] agreement covered by union contract, insofar as such costs are related to the mining of coal by [Sullivan Long] from the Lands. The existing agreement with the recognized bargaining unit of Mining Company employees provides for the payment into a welfare and retirement fund by each operator signatory to the union contract of the sum of 75cents per ton of each ton of coal as produced for use or for sale. With respect to coal so produced from the Lands during the term of this Agreement, SEGCO shall make such payment of 75cents per ton (or any corresponding amended payment amount) to the Mining Company for the account of such welfare and retirement fund. The Mining Company and SEGCO shall agree upon the method of determining the tonnage so produced for use or for sale as required for computing the amount of the payment to be made for the account of such welfare and retirement fund."

(Some emphasis original; other emphasis added.)

The term "welfare and retirement fund" in this provision refers to the 1950 and 1974 United Mine Workers of America Benefit Plans and Trusts (hereinafter "1950/1974 Trusts"), which provided health care benefits to coal industry employees who retired before 1974. As a signatory to the National Bituminous Coal ("NBC") Wage Agreements that established the 1950/1974 Trusts, Sullivan Long was required during the term of its contract with SEGCO to contribute to the 1950/1974 Trusts.

Pursuant to Paragraph 12(g)(4)(A), SEGCO paid these contributions on Sullivan Long's behalf. When, in the late 1970's, nationwide contributions to the 1950/1974 Trusts dropped precipitously because of changes in the coal industry, a third NBC Agreement in 1978 restructured the 1950/1974 Trusts. SEGCO then paid the adjusted amount of Sullivan Long's required contribution to the restructured fund, until the contract terminated in 1979.

In 1992, in response to escalating health care costs and a continued depletion in contributions to the 1950/1974 Trusts, Congress enacted the Coal Industry Retiree Health...